The $LAYER token airdrop project, which is associated with Binance’s HODLer initiative, has potentially been linked to the market-making firm Wintermute.
If true, this would obviously be a very big story for both the Solayer team behind the $LAYER token and for Wintermute. But for the rest of us, it raises two very big questions. Is there anything institutional market makers can’t do in the crypto space? And why are they doing this? If they’re doing it for Solayer and Wintermute, you can bet they’ll be doing it for lots of other crypto projects too.
Solayer Project Transfer and Wintermute’s Involvement
Merely 40 minutes ago, the Solayer project moved a vast quantity of 8.5 million $LAYER tokens to a location known as FzPL4…KkreF. The exact reason for this enormous transfer of tokens isn’t completely nailed down yet, but the strongest theory, at least right now, is that they’re being moved for liquidity management. Liquidity is a cornerstone of any new token’s success, especially when it’s on the verge of doing something big, like airdropping or going public; if there’s a lot of trading going on, and the trades are going off without a hitch, then the price is probably going to be stable.
Interestingly, nearly 750,000 of the $LAYER tokens from this transfer were immediately reallocated to an address associated with Wintermute, specifically the address GryEL…GuBPF. Wintermute, which is widely known for its role in market-making and the provision of liquidity across various platforms, has participated in several similar transactions. The address GryEL…GuBPF has often been linked with Wintermute’s operations, and many previous transfers and interactions have appeared to be consistent with market-making activity. The precise number of tokens assigned for this purpose cannot be confirmed yet, as the token transfer is still in process, but it looks like Wintermute is preparing to manage a sizable share of $LAYER’s liquidity.
Connecting Wintermute with the Solayer project only raises more questions about the broader role of institutional market makers when it comes to airdrops and tokens. Market makers like Wintermute provide absolutely necessary liquidity to ensure that freshly listed tokens have enough buy and sell volume to avoid nasty price spikes. This serves the market well. The Solayer and its associated airdrop would ideally also serve the market well. But there’s another aspect to all this. Even if Wintermute doesn’t have a hand in pulling the Solayer’s airdrop off, its presence as a market maker for $LAYER threatens to muddy those waters.
Wintermute’s Role in the $PENGU Project: A Closer Look at Similar Patterns
The link between Wintermute and the $LAYER token becomes even more fascinating when looked at in comparison to its entanglement with another project, $PENGU. The address associated with Wintermute that received the $LAYER tokens, GryEL…GuBPF, has also been in and out of the $PENGU token market with remarkable frequency. Wintermute has been a market-making maven for $PENGU, and the two addresses share such close characteristics that it makes you wonder if Wintermute’s involvement with $LAYER could ink up a similar pattern to its past market-making magic.
Wintermute appears to be doing two things in these situations. One is providing liquidity, which is simply the ability to buy and sell something without making the price swing around too much. If the $PENGU token can be “traded effectively on various exchanges without significant price swings,” then we can say that Wintermute has helped “ensure that investor confidence is maintained at the effective price level.” If its involvement with $LAYER is similar, then what will likely happen with the $LAYER token is, by and large, what would also be very beneficial for the Binance HODLer airdrop.
In addition, the substantial part of tokens being deposited into many exchanges implies that Wintermute is working behind the scenes to list $LAYER on many platforms—and ensure that when it is listed, it has sufficient liquidity for trading. Why ensure that liquidity is in place? If the token is going to be successful, a future moment when it has sufficient demand and volume will have been “gamed” to happen by now. In the world of cryptocurrency, a moment of future success can be engineered in many ways—but this is one.
Ongoing Token Transfers and Uncertainty Around Market-Making Totals
At present, we do not know precisely how many tokens we have given to Wintermute for market-making. This is because our transfers to Wintermute are not yet complete. However, from what we can gather after observing Wintermute’s previous market-making activities and its current nonstop engagement with Solayer’s token transfers, it seems quite probable that Wintermute will soon be overseeing a considerable volume of liquidity for $LAYER. These moves are crucial to Solayer’s next public step, a presumably smooth trading experience across a bunch of different exchanges that we expect to happen soon.
A project like $LAYER, which is high-profile enough to attract a market maker like Wintermute, is likely to be a successful one. The interest of a market maker in a project usually signifies that the project’s tokens have the potential to be liquid, stable, and relatively free of the kind of convoluted price-influencing mechanisms that some other projects rely on. From my perspective, these are the main ingredients of a successful project.
To sum up, although the overall extent of Wintermute’s involvement with the $LAYER token is still unclear, the current token transfers and the market maker’s previous provision of liquidity give every indication that the project is looking to make a solid debut in the market. The unfolding airdrop, the specifics of which are now emerging, and Wintermute’s part in it will be watched closely by the crypto community for the aforementioned reason.
Disclosure: This is not trading or investment advice. Always do your research before buying any cryptocurrency or investing in any services.
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Image Source: wirestock/123RF // Image Effects by Colorcinch
